What Do You Need to Get a Loan?

Dec 1, 2011
Asa Ghaffar

I Need a Loan Today - Image by Joseph a

You need to borrow money from your bank, but aren't sure of the current requirements. Here's what you need to get a personal loan in a difficult economy.

You urgently need to borrow money, but the lending requirements have been tightened. What do you need to get a loan in today's economy? You must be the sort of customer who is in a strong position to repay his debts each month. You'll need an excellent credit history, a low debt-to-income (DTI) ratio and a source of stable employment. The lending criteria haven't really changed, they're just tighter.

Provided that you don't plan to use the money for anything speculative, such as trading stocks, you can get a loan today for just about any purpose. You may wish to consolidate debt, buy a new car, perform home improvements or meet the cost of a foreign holiday. Rather than having to find all of the money in advance, you can get the cash you need and spread the repayments over up to 60 months.

When Should I Get a Loan?

There are many times when we want to borrow some cash, but it isn't in our best interests to do so. If you're financially stretched, borrowing extra money could exacerbate your financial troubles. You may need a car to get to work each day, but you don't need to buy the latest model. It may be better to save up for a few months so you can make your purchase without having to apply for a loan.

You just need to be sure that you're able to comfortably afford the monthly repayments. If you fail to borrow responsibly, your ability to get a cash loan in the future could be adversely affected. If you default on any of your agreements, this will be reported to credit reference agencies. This not only affects your likelihood of getting approval, it also has implications for the cost of borrowing.

What Do You Need to Get a Loan?

The better your credit rating, the easier it will be to get a loan today. Your FICO credit score is made up of your payment history (35%), how much debt you owe (30%), length of credit history (15%), new credit (10%) and types of credit used (10%). If you've paid your debts punctually for several years and don't owe too much money relative to what you earn, your credit should be very good.

You're going to need a stable employment history. If you're temping or still in your probationary period, this will get you an automatic decline. If you intend to take out a loan over the next 5 years, a temporary position doesn't provide the level of stability that's necessary to maintain the repayments. If the work dries up, it'll be difficult to avoid defaulting on the terms of the agreement.

What do you need to get a loan? You're going to need to be at least 18 years of age, provide suitable identification and have a bank account in your own name. You're also likely to find that your bank won't accept you if you've been declined for credit in the last 30 days. All credit searches are shown on your credit report for 12 months, so only apply for credit when you meet the eligibility criteria.

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